Corruption takes gloss off Indonesia's boom

Tom Allard

In September, Indonesia's leader Susilo Bambang Yudhoyono was moved to put pen to paper, composing a letter to Barack Obama.

He was agitated about the plans of the Florida pastor Terry Jones to burn a pile of Korans on the anniversary of the September 11 attacks. If allowed to proceed, it would ''humiliate'' Muslims around the world and threaten world peace, Dr Yudhoyono wrote.

The sentiments were a reflection of how many people felt, but in the country with the world's largest Muslim population, the reaction was somewhat unexpected. Dr Yudhoyono came under fierce criticism from the mainstream media and from tens of thousands of Indonesians who took to social media to vent their displeasure.

The reason? For much of the previous six months in Indonesia, there had been an alarming escalation in attacks by hardliners on Christians and followers of Ahmadiyah, the minority Islamic sect with some 200,000 members and a history in Indonesia dating to 1925. While the rants of a fringe preacher on the other side of the world upset him, Dr Yudhoyono had been silent about the surge in sectarian violence in his own country.

In many ways, the incident was emblematic of so much of what was disappointing in Indonesia in 2010. It was a year when the economy motored along, but worrying signs emerged that the very Indonesian values that earned the praise of visiting Barack Obama - democracy, tolerance and ''unity in diversity'' - were under pressure. Indonesia remains an overwhelmingly moderate country but religious violence has risen, directly aided and abetted at times by the police force. President Yudhoyono's response, when it came, was to appoint a new police chief with close ties to militant Muslim gangs linked to attacks on Christians.

Concerns about Indonesia's security services were further inflamed when soldiers were captured on film torturing prisoners in West Papua. Despite swift condemnation and assurances of justice by Dr Yudhoyono, the soldiers remain unpunished.

Meanwhile, Indonesia's leading reformer, former finance minister Sri Mulyani Indrawati, was forced to quit due to pressure from Dr Yudhoyono's coalition partners, including the head of Golkar, Aburizal Bakrie, whose companies were under investigation for unpaid taxes by Dr Indrawati's ministry.

Despite Dr Yudhoyono's thumping election win on the back of an anti-graft platform, the fight against Indonesia's pernicious, ingrained corruption faltered. Virtually no legislation of note was passed.

As Dr Yudhoyono's spokesman, Daniel Sparingga remarked about the year in politics to The Jakarta Post 10 days ago: ''We have achieved almost nothing of substance, to be honest.''

For investors though, navigating corrupt officials is an inconvenient part of doing increasingly lucrative business. Much of the economic growth in Indonesia has been driven by resource extraction aided by rising commodity prices. Gas, oil, coal and palm oil production is booming.

But the country's burgeoning middle class and pool of cheap labour are also attracting foreign investors, anxious to tap into a market of more than 240 million people and a workforce where the minimum wage is less than $200 a month.

Foreign direct investment rose by a third to $14 billion in 2010, while the sharemarket picked up 40 per cent.

Investors like Indonesia's relative stability. And it is remarkable given the chaos of 1998 that heralded Indonesia's adventure in democracy.

Still, while every man and woman has the vote in Indonesia and elections are fair, the institutions that underpin that democracy - the parliament, the judiciary, security forces and bureaucracy - are deeply corrupt and inefficient.

Graft, the selective use of the rule of law and crumbling infrastructure remain a curb on Indonesia's growth. If, or when, the terms of trade shift unfavourably and the hot money retreats, the continued failure to address these scourges is likely to be felt more keenly.

4 comments

An interesting article.Indonesia is not perfect for sure.But neither are we.It could be something more common to human nature if you reflect on our own behaviour here in Australia. One only needs to look at the litany of (edited by moderator) ongoing indescretions by members of the NSW labor party or the Gordon Nuttall bribery charges in QLD Steae politics for example.In relation to police brutality here in Australia I wonder how this example compares (below is an extract from a story posted by the ABC news in Oct 2010) "Western Australia's Attorney-General wants a review of police disciplinary procedures after two officers escaped prosecution despite tasering a man 13 times in a Perth watch-house.The call comes as New South Wales Police investigate the circumstances surrounding the death of a man who died after being tasered by officers during a domestic dispute in Sydney overnight."Hmmmm I think Indonesia doesn't look so bad when you consider Australia is meant to be a developed country and Indonesia isn't!

Commenter

fairgo

Date and time

December 27, 2010, 8:13AM

Why bother publishing irrelevant comments? The article is about Indonesia and not any other country.

The article highlights how difficult it is to combat entrenched interest groups, and in Indonesia it may be many decades (if ever) until substantial progress is made.

Commenter

DC

Location

Melbourne

Date and time

December 27, 2010, 9:15AM

Corruption is a poisonous cancer, it must be rooted out in Indonesia.

Commenter

hector

Date and time

December 27, 2010, 9:33AM

There are a few people in Singapore, Thailand, Malaysia and Indonesia who came from HUMBLE beginnings to MULTI-BILLIONAIRES in a very short time. If you believe their fortunes came from hard and honest work, then you believe in 'Tooth Fairies". Corruption exists everywhere even in AUSTRALIA but it is RAMPANT in those countries. Just another indication of not what you know but who you know.